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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38835

DESKTOP METAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

83-2044042

(State of Other Jurisdiction of incorporation or Organization)

(I.R.S. Employer Identification No.)

63 3rd Avenue, Burlington, MA

01803

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (978) 224-1244

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the Registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer

Smaller reporting company

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Name Of Each Exchange

Title of Each Class

Trading Symbol(s)

On Which Registered

Common Stock, $0.0001 Par Value per Share

DM

New York Stock Exchange

As of August 9, 2021, there were 260,674,860 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

    

Page

PART I

Part I. Financial Information

3

Item 1. Financial Statements

3

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

3

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020

4

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2021 and 2020

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020

6

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

8

Notes to Condensed Consolidated Financial Statements

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

38

Item 3. Quantitative and Qualitative Disclosures About Market Risk

52

Item 4. Controls and Procedures

53

Part II. Other Information

54

Item 1. Legal Proceedings

54

Item 1A. Risk Factors

54

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

81

Item 3. Defaults Upon Senior Securities

82

Item 4. Mine Safety Disclosures

82

Item 5. Other Information

82

Item 6. Exhibits

82

Exhibit Index

83

Signatures

84

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

    

June 30, 

    

December 31, 

2021

    

2020

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

188,199

$

483,525

Short‑term investments

 

326,318

 

111,867

Accounts receivable

 

13,441

 

6,516

Inventory

 

25,407

 

9,708

Prepaid expenses and other current assets

 

7,078

 

976

Total current assets

 

560,443

 

612,592

Restricted cash

 

676

 

612

Property and equipment, net

 

13,228

 

12,160

Capitalized software, net

 

226

 

312

Goodwill

 

251,060

 

2,252

Intangible assets, net

 

178,860

 

9,102

Other noncurrent assets

12,210

4,879

Total Assets

$

1,016,703

$

641,909

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

9,214

$

7,591

Customer deposits

 

2,829

 

1,480

Current portion of lease liability

 

1,983

 

868

Accrued expenses and other current liabilities

 

20,968

 

7,565

Deferred revenue

 

4,814

 

3,004

Current portion of contingent consideration

1,429

Current portion of long‑term debt, net of deferred financing costs

 

311

 

9,991

Total current liabilities

 

41,548

 

30,499

Warrant liability

93,328

Subscription agreement

474

Contingent consideration, net of current portion

4,655

Lease liability, net of current portion

 

3,959

 

2,157

Deferred tax liability

8,723

Total liabilities

59,359

125,984

Commitments and Contingences (Note 15)

 

  

 

  

Stockholders’ Equity

 

 

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Common Stock, $0.0001 par value—500,000,000 shares authorized; 259,712,899 and 226,756,733 shares issued at June 30, 2021 and December 31, 2020, respectively, 259,545,731 and 224,626,597 shares outstanding at June 30, 2021 and December 31, 2020, respectively

 

26

 

23

Additional paid‑in capital

 

1,387,779

 

844,188

Accumulated deficit

 

(430,565)

 

(328,277)

Accumulated other comprehensive income (loss)

 

104

 

(9)

Total Stockholders’ Equity

 

957,344

 

515,925

Total Liabilities and Stockholders’ Equity

$

1,016,703

$

641,909

See notes to condensed consolidated financial statements

3

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

    

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2021

    

2020

    

2021

    

2020

Revenues

 

  

 

  

Products

$

17,560

$

1,531

$

27,871

$

4,225

Services

1,417

658

 

2,419

 

1,349

Total revenues

18,977

 

2,189

 

30,290

 

5,574

Cost of sales

  

 

  

 

  

Products

15,490

9,372

 

25,977

 

14,413

Services

1,115

1,106

 

2,528

 

2,269

Total cost of sales

16,605

 

10,478

 

28,505

 

16,682

Gross profit/(loss)

2,372

 

(8,289)

 

1,785

 

(11,108)

Operating expenses

  

 

  

 

  

Research and development

15,651

9,827

 

26,509

 

22,167

Sales and marketing

10,894

2,958

 

16,343

 

7,452

General and administrative

13,142

2,964

 

26,988

 

5,589

In-process research and development assets acquired

10,400

10,400

Total operating expenses

50,087

 

15,749

 

80,240

 

35,208

Loss from operations

(47,715)

 

(24,038)

 

(78,455)

 

(46,316)

Change in fair value of warrant liability

(56,576)

Interest expense

(51)

(51)

 

(125)

(155)

Interest and other income, net

268

323

 

630

901

Loss before income taxes

(47,498)

 

(23,766)

 

(134,526)

 

(45,570)

Income tax benefit

4,318

 

32,238

 

Net loss

$

(43,180)

$

(23,766)

$

(102,288)

$

(45,570)

Net loss per share—basic and diluted

$

(0.17)

$

(0.15)

$

(0.41)

$

(0.29)

Weighted average shares outstanding, basic and diluted

255,097,905

158,124,160

246,717,400

157,186,939

See notes to condensed consolidated financial statements.

4

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

    

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2021

    

2020

    

2021

    

2020

    

Net loss

(43,180)

(23,766)

$

(102,288)

$

(45,570)

Other comprehensive (loss) income, net of taxes:

 

 

Unrealized gain (loss) on available-for-sale marketable securities, net

(5)

132

 

(4)

 

(27)

Foreign currency translation adjustment

130

117

Total comprehensive loss, net of taxes of $0

(43,055)

(23,634)

$

(102,175)

$

(45,597)

See notes to condensed consolidated financial statements.

5

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)

Three Months Ended June 30, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—April 1, 2021

252,436,919

$

25

$

1,326,945

$

(387,385)

$

(21)

$

939,564

Exercise of Common Stock options

2,683,506

 

 

3,485

 

 

 

3,485

Vesting of restricted Common Stock

 

56,015

 

 

 

 

 

Vesting of restricted stock units

28,656

Repurchase of shares for employee tax withholdings

(6,931)

(91)

(91)

Issuance of Common Stock for acquisitions

4,013,196

1

49,141

49,142

Issuance of common stock for acquired in-process research and development

334,370

4,300

4,300

Stock‑based compensation expense

 

 

 

3,999

 

 

 

3,999

Net loss

 

 

 

 

(43,180)

 

 

(43,180)

Other comprehensive income (loss)

 

 

 

 

 

125

 

125

BALANCE—June 30, 2021

 

259,545,731

$

26

$

1,387,779

$

(430,565)

$

104

$

957,344

Six Months Ended June 30, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2021

224,626,597

$

23

$

844,188

$

(328,277)

$

(9)

$

515,925

Exercise of Common Stock options

2,846,734

 

 

3,665

 

 

 

3,665

Vesting of restricted Common Stock

 

112,030

 

 

 

 

 

Vesting of restricted stock units

43,921

Repurchase of shares for employee tax withholdings

(9,172)

(145)

(145)

Issuance of Common Stock for acquisitions

9,049,338

1

208,988

208,989

Issuance of common stock for acquired in-process research and development

334,370

4,300

4,300

Stock‑based compensation expense

 

 

 

6,216

 

 

 

6,216

Vesting of Trine Founder shares

1,850,938

Exercise of warrants

 

20,690,975

 

2

 

320,567

 

 

 

320,569

Net loss

 

 

 

 

(102,288)

 

 

(102,288)

Other comprehensive income (loss)

 

 

 

 

 

113

 

113

BALANCE—June 30, 2021

 

259,545,731

$

26

$

1,387,779

$

(430,565)

$

104

$

957,344

6

Three Months Ended June 30, 2020

Accumulated

Other

Legacy Convertible

Common Stock

Additional

Comprehensive

Total

Preferred Stock

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

  

  

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—April 1, 2020

100,038,109

$

436,533

26,813,113

$

3

$

16,722

$

(316,066)

$

(84)

$

(299,425)

Retroactive application of recapitalization (Note 1)

(100,038,109)

(436,533)

130,138,012

13

438,037

438,050

Adjusted balance, beginning of period

156,951,125

16

454,759

(316,066)

(84)

138,625

Exercise of Common Stock options

 

28,173

4

 

4

Vesting of restricted Common Stock

 

1,750,360

2

 

2

Stock‑based compensation expense

 

1,074

 

1,074

Common Stock warrants issued

 

87

 

87

Net loss

 

(23,766)

 

(23,766)

Other comprehensive income (loss)

 

132

 

132

BALANCE—June 30, 2020

 

$

 

158,729,658

$

16

$

455,926

$

(339,832)

$

48

$

116,158

Six Months Ended June 30, 2020

Accumulated

Other

Legacy Convertible

Common Stock

Additional

Comprehensive

Total

Preferred Stock

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

  

  

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2020

100,038,109

$

436,533

26,813,113

$

3

$

16,722

$

(294,262)

$

75

$

(277,462)

Retroactive application of recapitalization (Note 1)

(100,038,109)

(436,533)

128,100,821

13

436,520

436,533

Adjusted balance, beginning of period

154,913,934

16

453,242

(294,262)

75

159,071

Exercise of Common Stock options

 

314,809

136

 

136

Vesting of restricted Common Stock

 

3,500,915

4

 

4

Stock‑based compensation expense

 

2,333

 

2,333

Common Stock warrants issued

 

211

 

211

Net loss

 

(45,570)

 

(45,570)

Other comprehensive income (loss)

 

(27)

 

(27)

BALANCE—June 30, 2020

 

$

 

158,729,658

$

16

$

455,926

$

(339,832)

$

48

$

116,158

See notes to condensed consolidated financial statements.

7

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Six Months Ended June 30, 

    

2021

    

2020

Cash flows from operating activities:

Net loss

    

$

(102,288)

    

$

(45,570)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

9,524

 

4,475

Stock‑based compensation

 

6,216

 

2,333

Change in fair value of warrant liability

56,576

Change in fair value of subscription agreement

474

Expense related to Common Stock warrants issued

 

 

43

Amortization (accretion) of discount on investments

1,304

Amortization of debt financing cost

9

10

Provision for bad debt

164

285

Acquired in-process research and development

10,400

(Gain) loss on disposal of property and equipment

(7)

 

10

Gain on investment, related to Make Composites, Inc.

 

120

Net increase in accrued interest related to marketable securities

(1,062)

Net unrealized (gain) loss on other investments

(517)

Deferred tax benefit

(32,535)

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

(3,584)

 

1,562

Inventory

 

(6,635)

 

(1,378)

Prepaid expenses and other current assets

 

(3,732)

 

1,033

Other assets

(170)

Accounts payable

 

(155)

 

(1,178)

Accrued expenses and other current liabilities

 

(5,119)

 

(1,074)

Customer deposits

 

(1,372)

 

(57)

Deferred revenue

 

693

 

(756)

Change in right of use assets and lease liabilities, net